IMPACT OF THE GLOBAL ECONOMIC CRISIS ON THE

AGRICULTURAL SECTOR OF SAINT LUCIA

INTRODUCTION/OVERVIEW
The world today is in crisis, it comes on top of the recent increases in
food prices, input prices extreme volatility of the oil market, heated
polemics, public demonstration and street protests which have already
taken its toll in late 2008. However, for our small and fragile economies
it is too soon to have a comprehensive picture of the real consequences of
the crisis that is affecting the global economic system. To date the
impact of the Global Financial Economic crisis on the agricultural sector
is limited and is still too early to comprehend the full social economic
impact on the agricultural sector.

While current Global Financial Economic Crisis is still unfolding, it is

envisaged that the second round effects on the real economy will be more
visible and serious. The drop in global demand, falling commodity
prices, lack of credit, retreat of foreign investment will hit the sector
hard.

We are still largely considered as an agrarian economy, and this crisis is

bound to affect our livelihoods. Other developed countries in Asia and
the Pacific already began to feel the impact of the crisis during the third
quarter in 2008. The strategic importance of agriculture has historically
been manifested through its contribution to employment, foreign
exchange earnings, food security and the socio-political stability of the
economy.

In our recent review of the agricultural sector we envisage major effects

that the global economic down turn will have on the sector:

• It has provided very serious and significant opportunities for the

sector and the country if we take immediate advantage of the
present environment.

• It is causing great concern especially for our export oriented

farmers and programmes

• Global Economic changes are affecting the context under which

farmers throughout the developing world participate in the sector.

• Economic globalization has brought about change such as

liberalization of trade and Investment formulation of regional
economic agreement and implementation of structural

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 adjustments projects (SAPS) and the removal of subsides and price
support.

While some farmers may benefit from economic globalization by shifting

to production of export commodities, accessing niche markets or funding
alternative sources of income related to consumer economics, many
others are threatened by low crop prices, removal of subsidies,
competition with cheaper imports, changes in credit availability, inability
to gain access to the market and a lack of access to inputs such as high
yielding seeds, fertilizer and irrigation. Likewise changes to climate are
also affecting agricultural production through increased rainfall, drought
and heavy winds etc.

However in the past, due to the forces of globalization, many developed

countries have reaped the benefits of faster economic growth, cheaper
imports, new technologies and increased foreign competition.

IMPORTANCE OF AGRIUCLTURE TO ST LUCIA

Agriculture has been the main-stay of St. Lucia’s economy over three
decades and has contributed significantly to the overall development of
the island.

Its contribution to national gross domestic product has declined from

10.6 in 1995 to 3.09 in 2005 and again increased to 3.26 in 2006 and
2007 respectively to 4.2 in 2008 with bananas contributing 1.7%. The
banana industry has single-handedly been the principle contributor to
the overall foreign exchange earnings with non-banana exports adding to
this amount.

However, in recent years the banana industry has declined significantly

and other activities such as tourism, service industries and to a certain
extent, manufacturing have become extremely important. Though other
industries have emerged within the rural communities, farming still
anchors most rural communities today. The decline is attributed to the
decline in banana exports, occasioned by the removal of preferential
market for the commodity, due to trade liberalization.

The population and housing census revealed a population that is steadily

shifting from rural to urban areas. The 2007 agricultural census reveled
a decrease in the number of holdings in 1996 to 2007 and a decrease in
land area in agriculture from 51,328 acres in 1996 to 30,204 acres in
2007 (41.6%). Over 70% of the farmers with more than 100 acres in
1996 disappeared by 2007. However, there was a substantial increase in
farms under 1 acre.

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There was noticeable and positive shift in the domestic purchase of non
traditional and positive shift in the domestic purchases of non traditional
crops: from 2005 - 2227 tonnes valued at EC$6.6 million; 2006 – 2692
tonnes at EC$8 million; 2007 – 2969 tonnes valued at EC$10.4 million;
2008 – 3301 tonnes, valued at EC$11.4 $million (up to mid September
08). A similar trend was recorded in the livestock and fish products see
table 1,2,3. There was a noticeable decrease in food imports from
101,828 M. tonnes to 56,264 m tonnes in 2008: a decrease of 45%

This drastic decline of the banana, in the earlier years, forced the
government of St. Lucia to focus on a diversified agricultural strategy to
achieve social development.

Diversification has been promoted through the emphasis on

(1) domestic markets for cabbage, tomatoes, sweet peppers, lettuce,

cassava, yams, sweet potato, dasheen and other tree and fruit
crops.

(2) Export crop production hot pepper, breadfruit, plantain, cocoa,

mango, avocado etc for the generation of foreign exchange.

It is envisaged that Saint Lucia’s agricultural diversification thrust will

help to bring about major benefits both at the national and farm level.
The new vision for the sector is to sustain a diversified national
agricultural income base and enhance the integrity of rural livelihoods
systems by generating the capacity for efficiency and the competitive
production and marketing of agricultural goods and services.

In light of these new realities the Government of Saint Lucia in its

agricultural policy 2005-2015 has identified seven (7) broad strategic
directives, to:

1. increase the efficiency and competitiveness of agriculture.

2. promote the adoption of improved appropriate technological

packages

3. expand and diversify agricultural production value added agro

processing and the general market bases

4. enhance the national food security status

5. generate new opportunities for employment and income generation

in rural areas

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 6. conserve the natural resource base, and

7. modernize legislative policy framework for optional agricultural

production and trade.

This vision and policy will only be realized by the active participation of
all St. Lucians.

OPPORTUNITES
The agricultural sector provides probably the best opportunity for our
country to ride out the economic downturn and come out stronger
economically than ever before.

The following opportunities are identified

• Farmers/producers/farmers groups and our nation on the whole

should take advantage of the crisis and produce in large quantities
food and root crops, vegetable and increase our livestock
development programe. This will ensure food security and
sovereignty for our country, and open up massive opportunity to
export food to address the expected food shortages in some
countries of the world.

• We should use this opportunity to transform our economy and give

agriculture its true place as the leading pillar of our society and
provide it with its due weight in resource allocation. We can use
the food as well as non-food crops to create industries for value
addition in the country; to produce what we need to consume and
to make our economy much stronger, in terms of exporting value
added products regionally and extra-regionally.

• We should investment in our human resource and increase their

capacity by the formation of groups and associates, and to
empower farmers to become lobbyists to negotiate for themselves.

• Encourage farmers to strengthen their organizational skills for

their business, and also further development of their skills.

• Engender greater efficiency in the utilization of raw materials to

produce more value added goods. Opportunity for using simple
approaches, for example pealing of dasheen and other produce on
our supermarket shelves. While no serious investment is necessary
for this, it requires skill.

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 • Training and skills development of farmers.

• Strengthen business and financial management acumen of our

stakeholders

• Encourage farmers to become more innovative in terms of

technology and inputs

• Form partnerships between public and private sector ventures.

• Create opportunities for famer organizations to come together

under an umbrella national farmers organization; to provide ;
greater support within the agricultural sector. There is presently a
body that can be used if properly organized to lead the farmers in
this respect (i.e.) the Chamber of Agriculture.

CHALLENGES
Apart from some of the opportunities highlighted, the world economic
crisis will also bring challenges to the sector.

• Higher cost of imports

• Dwindling Market prices for agricultural produce – if the market

for produce is not organized, oversupply and future decline in
market process will occur.

• Producer uncertainty

• Because of the opportunities – exodus of large number of farmers

to the agricultural sector by informal producers. Ministry of
Agriculture may not have the resources to monitor the increase in
production by those non produces in a timely manner for timely
market forecasting.

• Regular farmers may not be able to meet loan payments and other
commitments as a consequence of over-production and over-
supply, for example access to cheaper poor value foods, high cost
of production – not reflected in price paid to farmers

• Higher cost of inputs

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 • Real risks, as a consequence of the crisis, that people would have
to reduce their food intake and the number of hungry would rise
further

• When societies are in danger of collapse during severe economic

turmoil for e.g. Asia in 1997, evidence significant rises in suicide
and crime rates, abuse and violence against women (Heyzer et al
,1999; Knowles et al, 1999). Women bear the brunt of this social
fallout.

• It threatens to wipe out the gains painfully made over the last
decade, and to reduce growth in the agricultural sector to below
the level needed for this country to become a net importer of food.

SOME ACTIONS TO STIMULATE AND RIVITALIZE THE SECTOR IN THIS

CRISIS
These include:

• Increasing the budget for agriculture implementation from 2% to

5% to 10% in budget year 2008-2009-2010-2011.

• Directing the Economic Partnership Agreement (EPA) funds to the

agricultural sector

• Directing more Special Framework of Assistance(SFA) funds and

other grant funding to develop appropriate, meaningful projects
programes to support food production in the sector.

• Insist at the European Union (EU) level for a suspension of the

Tarrification and also WTO agreement and present barrier to trade
from the ACP countries.

• Insist at EU/WTO level provision of subsidies/incentives for our

farmers and farm products so as to create the enabling
environment for producing cheaper local food. Create a fund for
price support to consumers and assist farmers with incentives to
assist food prices that would help in providing cheaper foods to the
population.

• Provision of further support and lower interest rates for lending to

producers through agricultural development bank or other
financial institutions with less stringent measures for farmers to
take loans for enterprise development.

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 • Establishment and initiation of a special allocation to support
farmers through some form of investments bank window.

• Create an investment pool for the purchase of farm equipment and

other agro industrial equipment eg. tractors, cold storage
equipment, water storage facilities for on farm production.

• Insist at the EU level and through other funding agencies the

creation of an agricultural stimulus package in support of our
diversification efforts, to support our food security and sovereignty
and price support mechanism and programs in the agricultural
sector. Increased impetus for our support for local producers (buy
local campaign) World Bank have pledged their support during the
recent years.

GOVERNMENT SUPPORT STRUCTURES REQUIRED TO STIMULATE

THE SECTOR

In order for farmers, producers and other stakeholders in the sector to

increase on their scale of production or productivity as well as their
entrepreneurial and agri-business development skills, a number of
measures will need to be implemented by government to ensure success:

• Accelerate the creation of a funding support mechanism to

producers through Development Bank, credit union so as to gain
access to credit with very low interest rates facilities for venture
capital programmer.

• Provide support to the development of an economic /agricultural

development fund, to cushion the effect of any future crisis in the
sector. One suggestion is a small premium on producers sold to
supermarkets, hotels, etc, be collected on behalf of government
and placed in a fuid to support times of economic hardship.

• Provide increased support to farmers and provide farmers

stakeholders with very advanced and improved technologies,
improved seeds materials and other low cost inputs especially
fertilizer and other high price inputs.

• Create the facilitation of timely delivery of inputs.

• Create investment opportunities for developing and purchasing of

appropriate water storage structures and facilities for harvesting
and developing of potential sources of water for irrigation. (to much
water is being lost during heavy periods of rain). Present water
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 harvesting pilot project in the Maboya Valley should be extended to
other regions.

• Create the enabling environment to provide irrigation facilities and

structures for all farmers as required by 2012.

• Provide for the orderly and sound marketing of all farmers produce
development and establishment of a central market/facility to be
owned and operated by farmers groups or private sector.

• Form partnerships and alliances with all hotel and other entities
on the island. Call for a review of tax incentives provided to those
entities including clauses which will inform level of tax holiday and
tied to the purchase of local products as a major part of the
agreement for receiving Tax concession. Negotiations methods and
agreement for payment to these farmers on a more timely basis.
Create the enabling environment for the hotels in ensuring
reliability of produce on a regular basis, the hotel should consider
joint ventures investment with producers to ensure success for
both parties. (agri-Tourism linkages improved and increased).

• Seek assistance and guidance in support of imposing tariff on

imported competing goods. This will have to be negotiated (CSME,
WTO, etc).

If St. Lucia is to properly implement this programe, additionally,

Government needs to urgently put measures in place and ensure that
the Labour Code is swiftly put into law. The enactment of the labour code
will encourage and promote a more efficient and productive labour force,
and ensure that our farmers will get a fair day work for a fair day pay.
Presently labour in the sector is about 3 hours per day. There is need for
Government to formulate plans for the adoption of a Regional Farm
labour Exchange programe/project. This program, needs to be well
organized and supported by the people; failure to do this could lead to
anarchy.

Government must continue to invest in technological development,

especially creating the synergies in the agricultural and energy sectors –
development of solar and other forms of renewable energy on farms –
including agro base renewable energy.

In order to bail out the producers, buyers, processors and all

stakeholders in the value chain from the impact of the Economic Crisis
there is need to access:

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• Long-term credit facilities, it is expected that this facility will be
housed in the newly established development bank which will offer
long term loans at affordable rates to enable all stakeholders to
sustain and develop the sector during the recession. A revolving
fund facility is suggested.

• Opportunity for Government to support a much needed Insurance

programme for crop and livestock enterprise apart from bananas

• Increased public spending and Investments in Agriculture;

Government needs to create enabling environment e.g. to
subsidize loans to farmers and rural infrastructure investment –
China/Vietnam through stimulus packages support resulted in the
improvement and sustainability of the agricultural sector, such a
programme can be given consideration

• Government through the European Union and other funding

agencies for the establishment / development of a pension fund for
our present and ageing population of farmers.

• More support required for government as it relates to value added

agro processing. Criteria should be set for providing incentives
and concessions.

• Seek further support and funding from government as it relates to

value added and agro industrial development and processing
facilities, which is presently pursued by the government.

• Review of the present criteria as it relates to incentives and other

funding support mechanism to assist producers in the
development of their enterprises. Presently the Ministry of
Agriculture is in the process of implementing its agricultural policy
and strategy this should be enacted into law as swiftly as possible.

• Develop strategies and programmes to turn crisis into

opportunities and pursing supportive monetary and agricultural
fiscal policies as it envisaged that the aid expected in the region
will decline and further exacerbate the problem.

• Maintain the macro economic fundamentals and minimize the

social consequences of the crisis.

• Undertake strategies’ long term investment in physical human

capital and fiscal packages, which should be pro poor. Monetary

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 policies that are geared to keeping the agricultural financial sector
liquid so that enterprises can survive. Other measures should be
carried out to minimize unemployment, protect small enterprise
and embark on rural development programmes.

CONCLUSION

In conclusion we recognize that agriculture has a major role to play as

the Global Economic Crisis Saviour to our small Island State.

Our recent celebration of our thirty years of independence agricultural

exhibition bears testimony to the potential of the agricultural sector if
given the necessary support as outlined above.

We have recognized the new and emerging consumer groups which have
become very busy an increased working class made up of predominately
a large number of female headed households. The St. Lucain farmers
has to move to another level of product development and packaging for
direct sales to the supermarkets in an already prepared form on our
supermarket shelves so as to save time in the normal peeling and other
preparations of these products by our housewives and house husbands.

The ministry is continuing its efforts in terms of value added promotion

of local foods and adoption of improved technology by farmers. Every
effort should be made by regional governments to implement its common
regional agricultural policy suggested by President Jequed to avert the
direct impact on the global economic crisis on our very important
agricultural sectors. Given the present crisis agriculture is one of the
sectors which can provide sustainability to this economic dilemma which
has been forced on our small economics.

Our government should make every effort and endeavor to further

revitalize the agricultural sector and give real meaning to the agricultural
sector as the true backbone of the St. Lucian economy because it
touches the lives of all people / citizens (rich, poor, old, young, visitors,
humans, non humans), in fact it impacts on the lives of all living things
since it is the sector which is responsible for feeding our nation and
visitors alike and provides its factories and agro industry with raw
materials and generates a very significant portion of its foreign exchange
earnings.

Agriculture has contributed significantly to the sector although different

sub-sectors have been affected to different degrees, however the

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agriculture sector has not been deeply hurt by the crisis. At the same
time we need to take this opportunity to lead us out of this crisis.

There is no doubt that the St. Lucians producers are highly capable of
the hard work and dedication needed to pull the economy out of any
crisis. Our recent increases in production both in the livestock and crop
sections bear testimony to our efficiency and effectiveness.

If St. Lucia is to properly implement its programme we will not be

subjected to the brunt of the economical and financial crisis presently
being experienced by developing and some financial crisis presently
being experienced by developed and some developing countries and
become a more food secure and food sovereign state.

There is urgent need for us to sustain our agricultural reform policy as

well as renewing our focus on financial institutions for both business
and famers to access funds.

St. Lucia’s agriculture needs to promote good policies, sustainable

public, private partnership as well as establishment of industries
standards.

On a national scale there is need to refocus our attention on food, water

management and renewable energy production and implementing
measures to stimulate development on the basis of agricultural models
that are both sustainable and equitable. We can reform our agricultural
policy to suit both primary and commercial agriculture to make it more
attractive. In this sense the current crisis may have more positive effects
on our agricultural sector.

In understanding the new economic climate that is presently challenging

the sector. There is need to provide our farmers, policy makers,
agricultural professional and other critics in the sector in the
development of their psycho-social skills, and rather than adopting the
microwave philosophy on the success of an agricultural sector, that
agriculture is not a quick fix.

We strongly believe that agriculture is the only sector that will see the
economy through the world economic recession and crisis. We need as a
nation to be more patriotic and support our buy local, eat local
campaigns and other programmes in particular our backyard garden,
school gardening urban gardening initiatives as well as our intended
support to elderly homes and community development groups including
the diabetic, blind and other disadvantage groups, and by so doing to
provide our people with the support to drastically reduce the high

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prevalence of diabetes and other non-communicable by providing more
wholesome food to all persons living and visiting our shores.

On the American Continent plans are afoot through and initiative by the
American First Lady, Michele Obama: “My hope is that through children
they will begin to educate their families and that will in turn begin to
educate their families and that will in turn begin to educate our
communities”.

I am once again appealing to all St. Lucians to support our efforts at

recreating a green revolution in St. Lucia and support our recessions
gardens initiative as well as our plant a tree and other initiatives and
maybe together we can help spread the grow your own message right
here in St. Lucia, and to use a similar message by the Obama” Can we
grow it” can we beat this Global Economic Crisis – YES WE CAN.

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